Tackling State Of Small Biz: Community Banks

President Obama knows he has to help small business if the economy is going to recover. He made four major proposals directed at small business in his State of the Union speech.

Rhonda Abrams at USA TODAY takes a closer look and sees what needs to be done to make them really work.

$30 billion in Troubled Asset Relief Program (TARP) money redirected to community banks to get them lending to small businesses. That’s a nice carrot for the banks, but it has to be accompanied by federal monitoring to see that the money actually gets out to small businesses. This policy needs:

Easy paperwork, fast decisions. An earlier program last year failed because there was just too much red tape.

Mandatory loan distribution. When money was given to big banks, they used it to pay down their own debt and buy up assets, not to make loans. Let’s not make the same mistake. Require a substantial portion (all?) to be actually given out in loans.